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I’m not finished reviewing Cloudera’s recent earnings. Bert just came out with an article reviewing the company’s prospects which will be available on Seeking Alpha shortly. In short, he seems to be quite positive.

Here’s an example of potential multiple expansion as the stock has been beaten down. To date, I’d say necessarily so; however, future opportunities especially after merging with their largest competitor may foretell good things to come.

Valuation is a bit tricky right now as the merger isn’t complete. Suffice it to say, the valuation is low and there are real opportunities for synergy. This isn’t a merger of adjacent companies, but direct competitors.

The real issue to understand here (and I do not yet) is the growth outlook for their solutions. Cloudera just reported 25% growth and is close to non-GAAP profitability. Cloudera and Hortonworks appear to have different and now complimentary focuses. Hiring can slow a bit as the companies are merged.

Unless Hadoop (plus other solutions they offer) are going down the tubes, this is worthwhile of consideration at this point. Investing before the market wakes up to the opportunity, that is.

I’ll come back with more, but thought I’d throw this company out there for consideration (again).

A.J.
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Thanks AJ.

Would appreciate if you would update this thread when we discussed CLDR and its poor decisions on strategic customer acquisition:

https://boards.fool.com/tinker-cloudera-33039264.aspx?sort=w...

How has this changed.....I haven’t really looked it over recently.

Your thoughts much appreciated!
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So what
Cloudera's revenue rose 25% year over year in Q3; subscription revenue (considered more valuable than revenue in general, because it's more dependable, and recurring) was up 28%. Cloudera did not earn a profit, but its $26.4 million operating loss was less than half the amount of money it lost in last year's Q3. Calculated according to generally accepted accounting principles (GAAP), Cloudera suffered a $0.17-per-share net loss -- also less than half what it lost one year ago.


I suppose Bert must be more optimistic about a merger with Horton because the above growth numbers would favor PVTL over CLDR as a recovery play IMO.

SO perhaps it’s about the merger?
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How has this changed.....I haven’t really looked it over recently.

I invested in Hortonworks and made a decent chunk of change before getting out. I would have made more if I would have held a bit longer. While I have some familiarity with Hadoop because of that investment, the technology is still difficult for me to grasp (even in layman’s terms) and I have a tough time understanding how it all fits. That is likely in large part because the tech hasn’t been discussed much here.

Hadoop has had a negative perception of requiring a lot of services (read: lower margin). Hortonworks spending displayed this. While I hadn’t followed Cloudera much, I understand they had a similar problem though are reaching profitability soon. The merger should help this as they no longer have to compete.

The biggest difference is going to be adding Hortonworks to the equation. The tech is still up in the air.

I plan on posting more tomorrow after I have had a chance to review further.

A.J.
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I suppose Bert must be more optimistic about a merger with Horton because the above growth numbers would favor PVTL over CLDR as a recovery play IMO.

Yes. Bert has been optimistic since the merger was announced.

A.J.
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https://seekingalpha.com/article/4227123-cloudera-reaffirmin...

Cloudera is likely never to return to the 30/40% growth clip that it was achieving last year. But this year, much focus has turned to the downside after Cloudera announced its sales transition and expectation of lower net retention rates. With investors bracing for the worst

So with the proclaimed TAM, they should have it wrapped up in about 100 years:

The two companies have barely cracked a fraction of the ~$83 billion it estimates as its total addressable market (NYSE:TAM). As seen in the chart above, this TAM consists of a variety of use cases - apart from standard database applications, Hadoop can also be applied to various analytics and AI use cases as well.
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Yes, and Mongo can probably handle 80% of the use cases expressed in the TAM.

Tinker
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Yes, and Mongo can probably handle 80% of the use cases expressed in the TAM.

You’re getting to the real question at hand in terms of the survivability of the company and long term prospects.

That said, if there is a niche use with a decent sized TAM there is still room for growth and multiple expansion. Just don’t really understand the competitive landscape here.

AJ
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That said, if there is a niche use with a decent sized TAM there is still room for growth and multiple expansion.

This is, of course, the question. That there is a role for NoSQL ... or perhaps, more accurately, non-relational databases there is no question. But, every database is going to add more features every year to broaden their addressable market. To be sure, Hadoop is a quite different approach than Mongo to something other than relational, so the question is, does the fundamental underlying approach of Hadoop match the requirements of a large portion of the non-relational database requirements in a way that Mongo can't, because of its fundamental approach or can Mongo keep adding features, as it has done with the addition of multi-table ACID properties that extend the use cases to which it applies.

My bet would be on the later.
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Two ways to look at it, less competition or not enough market for two companies to compete. Either way 25% growth is not dazzling at present. If that accelerates it will do nicely.

But as indicated w MDB, taking out Hortonworks does not necessarily remove competition.

Tinker
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But as indicated w MDB, taking out Hortonworks does not necessarily remove competition.

Ok. Here's what I can try to succinctly summarize here.

TTM EV/S of the new enterprise is roughly 3.2X. I expect this is de-risked territory. Not suggesting de-risked is a good thing. It definitely requires patience and may not work out. Yes, the company could be cut in half, but the metrics don't make that likely without a big market correction that trumps all valuation estimates.

Looking at management's slides on the merger, they expect CY 2020 to produce greater than the following: $1B in revenues, 10% OpM, 15% Operating Cash Flow Margin.

Using $1.1B in revenues, you get a 20% CAGR. Not great, but that would be producing decent cash flow and growing margins as well.

Assuming in 2020 investors expect 20% growth to continue, what would that company be worth at that time?
Without multiple expansion, it is a 20% CAGR (minus dilution which has been in excess). With multiple expansion, gains could be much larger.

I hear all of the nay-sayers on cheap stocks and I don't disagree, but still suggest there is reason to look under the hood.

A.J.
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Assuming in 2020 investors expect 20% growth to continue, what would that company be worth at that time? Without multiple expansion, it is a 20% CAGR (minus dilution which has been in excess). With multiple expansion, gains could be much larger.

Perhaps so...tough niche to be invested in, tough technology and only for the large customers.....they only grew by 33 this past quarter.

In that regard, low number of larger enterprise size customers, they remind me of the perils of PVTL.

In the case of PVTL, they have greater revenue growth and seem to control the PaaS space?

I am going to throw some play money at them tomorrow before earnings on the following basis:

1) The massive stock lockup is already behind us in Oct.
2) The stock has hovered at a base of $17-18 for 3 months and the market already knows the weak guidance.
3) They already have 35 new customers in first half of year vs. 44 in entire 2018 year. Just 9 new customers gets us last year’s total in just 3 quarters of 2019 and that bodes well for 2020 revenue growth.

Whatever you do, do NOT follow me in this trade...its just a probability play for likelihood of further downside vs upside.
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